In today's tough economy, many small business are trying to save every penny. Unfortunately, many small businesses are skimping out when it comes to protecting their businesses from employment related lawsuits.

Here is my top ten list of employment law mistakes made by small businesses:

1. NOT PAYING OVERTIME: Sometimes, in order to avoid paying their employees overtime, employers just assume they can pay their employees a salary rather than paying their employees for working over 8 hours in one day or 40 hours in one week.

2. NOT RESEARCHING AND FOLLOWING THE APPLICABLE LAWS THAT WERE CREATED FOR THEIR SPECIFIC BUSINESS: For example, Los Angeles county has specific regulations for body art establishments.

3. NOT ENFORCING A MEAL AND REST BREAK POLICY: California is a pro-employee state and the burden is on the employer to prove that it made sure that their employees took all of their breaks. That's why it's important to regularly communicate the break policy to employees.
Employers are required to not only provide meal breaks, but also keep records of when the employee started and stopped taking his meal break. Thus, recording an employee's breaks is key!

4. FAILING TO PAY THE EMPLOYEE HIS ACCRUED VACATION AFTER HE LEAVES: Accrued and unused vacation is considered wages under California law, and needs to be paid out at the end of employment regardless of whether the employee is fired or quits.

5. RELYING ON NON-COMPETE COVENANTS: The fact of the matter is that covenants not to compete are generally unenforceable in California.

6. NOT HAVING AN EMPLOYEE HANDBOOK: An employee handbook sets the tone for the business. It not only welcomes the employee, but provides her with the protocols she will have to follow while working for that employer. Perhaps most importantly, a well written handbook will be an employer's friend in the event that they are sued by an employee or ex-employee.

7. MISCLASSIFYING EMPLOYEES: Tread softly when classifying someone an independent contractor. Keep in mind that the more control you exercise over that individual, the more likely it is that they are an employee.

8. NOT HIRING AN ATTORNEY TO HANDLE EMPLOYMENT MATTERS: A good attorney can help an employer prevent employment lawsuits by tailoring a handbook for the business, providing the employer answers to their questions, and even training its employees.

9. NOT PURCHASING EPLI INSURANCE: Employment Practices Liability Insurance (EPLI) covers companies against lawsuits or claims filed by employees, former employees and employment candidates. The insurance coverage protects the company, its directors, officers and other employees. A company can use this type of insurance to cover expenses associated with employee rights violations, such as alleged acts of discrimination and wrongful termination.

10. NOT REIMBURSING EMPLOYEES FOR BUSINESS RELATED EXPENSES: Employers must reimburse employees for business related expenses, such as travel expenses. Under Labor Code section 2802, employers are required to repay employees who pay for business related items out of their own pocket.

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